Sale of Certain Private Banking Client Relationships

In August 2017, our Private Banking business entered into an agreement to refer parts of its Latin America portfolio, consisting primarily of clients based in areas where we do not have a corporate presence, including Central America and the Andean Pact, to UBS Wealth Management Americas ("UBS") for a period of two years, which concluded during the third quarter of 2019. Under the terms of the agreement, we facilitated the referral of these client relationships to UBS, including the transfer of client assets as well as the transfer of the relationship managers and client service employees that supported these clients. At the time the agreement was signed, total client assets associated with these relationships consisted of approximately $3.5 billion in client investments (which were not reported on our balance sheet) and $1.7 billion in client deposits (which were reported on our balance sheet). Loans associated with these client relationships were not included in the agreement. UBS paid us a fee of 0.5 percent of the aggregate client assets transferred during the two year period which, based on completed transfers of approximately $1.5 billion of client investments and $0.8 billion of client deposits, resulted in total consideration of $12 million, all of which has been received. The consideration we received was contingent upon the clients' decisions to transfer their accounts to UBS, the timing and amounts of client assets transferred and the acceptance of the client assets by UBS. In 2017, as a result of entering into the agreement, we recorded the contingent consideration expected to be received at the time of $15 million as a receivable at estimated fair value within other assets and recognized a pre-tax gain on sale, net of allocated goodwill and transaction costs, of $8 million in other income. In 2018, we reduced the contingent consideration receivable to $12 million and recognized a $3 million loss in other income as a result of a decline in estimated fair value based on a revised estimate of the amount of client assets that we expected would be transferred.